Tuesday, January 29, 2008

Tom D’Aquino of the CCCE felt the need to intervene with the CRTC on behalf of CCCE Member and CCCE Director, Michael Sabia, who also just happens to be the CEO of BCE and the individual who, for all intents and purposes, ran the BCE "auction" which was widely criticized.

Here is D’Aquino’s flawed logic contained in his intervention. None of which, incidentally, relates to any of the Acts that the CRTC is duty bound to enforce:D’Aquino: “The proposed transaction approved by the majority of shareholders (Editor's note: actually 61%) of BCE, is a reflection of the market’s preference. The market should be allowed to prevail, subject to existing Canadian ownership and control requirements. To that end, I am indicating the CCCE’s support for the above-noted application by BCE Inc, related to its proposed transaction to change its ownership."

Rebuttal: How reflective of market forces governing the outcome of the BCE sale process is the following, as reported by Canadian Press?:

“The directors of BCE Inc. were kept in the dark about offers for the telecom giant by managers and advisers who manipulated the bidding process to freeze out bondholders in the sale of the company, lawyers for the bondholders said Monday.”

"Tom O'Neill, Jim Pattison and Donna Kaufman, the head of BCE's strategic oversight committee - testified they were unaware or couldn't remember seeing all the details of the bids or how they would affect all stakeholders." How can Tom D’Aquino claim to know what the market’s true preference was, when BCE failed in its disclosure obligation to tell its shareholders about the Catalyst Proposal?

Is this the CCCE’s idea of good corporate governance and the free flow of efficient capital markets? Is this the CCCE's idea of how a Board of Directors of Canada's most widely held public company should function? Or any Board for that matter in fulfilling their fiduciary duty?If so, the CCCE has no credibility. If not, they should retract their stated support of the BCE takeout, in light of new unseemly information.D’Aquino: “The objective of the major investor, Teachers’ is to strengthen a Canadian enterprise in pursuing strategies for growth and value creation”Rebuttal: Teachers is not the major investor. They are only providing $4 billion of the acquisition price of $32 billion, of which the $26 billion in junk bond financing makes the new bondholders (Citibank, Deutsche Bank, Royal Bank of Scotland, etc.) the largest investors. See attached deal sheet from Teachers. The result is that BCE will become the most debt levered telecom company in the world with 3.6 times the Debt:Equity leverage of the average Telecom company. How will this help BCE grow as D’Aquino claims. More likely to default or divest. Meanwhile Tom D”Aquino should acquaint himself with the following articles and brush up on a few facts before putting pen to paper:

EVENTS

Income Trust Halloween VigilThanks to all who participated in both the Ottawa and Calgary vigils to mark the anniversary of the announcement.

WE"D LIKE SOME ANSWERS

As you well know, the ‘income trust thing’ has grown beyond the
question of whether fair taxes are paid on income from trusts. It’s
become a giant dirty snowball, and as it rolls forward it accumulates
more and more bulk. There are so many unanswered questions. Let's list a few and invite our "Accountable" government and our free press to provide some much-needed answers.

It is said “Trusts are inefficient use of capital. Why?” Two
related questions are ‘Whose money is it, anyway?’, and ‘Do Canadian
investors have a free and efficient market?’

How can information that is already in the public domain at SEDAR
make for a state secret? How could such information be used to harm
the Canadian national interest? And who would cause the harm?

Why won’t the Canadian media investigate the falsehoods and
misrepresentations told by the Minister of Finance to a committee of
Parliament? Was the Minister in contempt of Parliament?

Why won’t the Canadian media report (a) government tax revenues
gained from BCE in 2006 when BCE was a corporation to (b) government
tax revenues that would be gained in 2007 from BCE, if BCE had been
allowed to proceed to a trust, and (c) government tax revenues that
will be gained in 2007 from BCE, when BCE ownership has been carved
up as 45% foreign ownership and 55% large Canadian pension fund
ownership?